Sat. Apr 20th, 2019
Humans of Blockchain | Prediction Markets with Martin from Gnosis

Interview with Martin Koppelmann – CEO & Co-Founder of Gnosis | Humans of Blockchain

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Welcome to our comprehensive interview series – Humans of Blockchain  where we get the best in the business to answer a diverse set of questions.

This series will clear the air of doubt in the blockchain space today by focusing on bringing more transparency to the readers.

Our guest today is Martin Koppelmann – CEO & Co-Founder of Gnosis 

Martin is also an experienced personality in the Cryptocurrency Industry and has some insightful opinions about the prediction markets and decentralization. 

Humans of Blockchain had the pleasure of meeting Martin at TOKEN 2049.

Not wasting much time, let’s hear it out from Martin himself.

 

1. We would love to know more about yourself and your journey which brought you into the Blockchain space, Martin. 

It was quite a while ago (I think 8 years). We got excited about Bitcoin, it was more or less the only thing that existed back then. It was a new thing, a new form of money, totally decentralized and back then it was totally unheard of so the excitement was there. And out of the curiosity about Bitcoin, we wanted to build something around it. We started the Bitcoin Prediction Market. Over time we got more and more enveloped in the idea of building prediction markets. Then, for us, Bitcoin became less relevant, Ethereum came along. We wanted to build a decentralized prediction market with Bitcoin but that wasn’t really possible. Eventually, Ethereum came and brought the ability of Smart Contracts, we saw a clear path to actually build what we had been trying to build – A decentralized prediction market and that’s how we started Gnosis and that’s what we have been doing for the last four years now.

 

2. Can you tell us more about Gnosis as a company? The core features and the vision/ mission.

At the core of Gnosis, we want to enable prediction markets. Prediction markets are a better way of aggregating information so in the end, we have better information to make better decisions. There are plenty of things that are super relevant like wether Brexit happens, or Ethereum gets scaling right, all those things where if you know the answer or a better forecast of whether it’s happening or not you can make better decisions today and there might be some people who have better information about the future but we do not have the tools to aggregate all the available information and it’s really hard to find the right experts. And to build that, unfortunately, there was and is still a shortage of the infrastructure required. But we launched a proof-of-concept just two weeks after Ethereum’s launch. But it was very limited so gearing our time and being very active members of the Ethereum community, we discovered the need for a lot of infrastructures. So like one of the things we are prominent for is the multi-sig wallet (we wanted to hold our token sale using a multi-sig wallet and since there wasn’t one, we built one haha). That went further and we created a product out of it. The Gnosis Safe which is bringing the concept of multi-sig to individuals. So far it’s only used by teams but an individual should also be able to use it where you have one key on your phone, another on your computer and the third key on your hardware wallet, and you need two keys out of those to confirm a transaction. Gnosis Safe makes it simple and whenever you try to make a transaction you get a push notification on your phone.

Additionally, we are also working on Decentralised Exchanges, wherein Prediction markets we can create outcome tokens, the things that payout if something happens and they don’t if it doesn’t. But in the end, all we care about is trading them and having a market for them. Decentralized exchanges can be considered as market mechanisms. The first move towards making decentralized exchanges was to copy what was already there in the traditional exchange, on Ethereum but it turned out that had a bunch of issues (frontrunning, low latency, high fees), so those are some reasons why we believe that liquidity hasn’t really arrived and we believe that these exchanges need to be designed in a different way while taking into account the decentralized nature, the idea that you don’t have a central operator. We are very much into the concept of auctions to enable better ways to trade. In general for tokens but of course specifically for prediction markets.

To summarise the three things we do. We like to call it –

Create

Trade

Hold

Enable new asset class in the prediction market, trade them, and hold them.

 

3. There was a recent market crash which had a drastic effect on Ethereum. Did/ does that factor affect your foundation?

Of course, it affects us because we hold a bunch of Ether. We have been somewhat lucky though, I mean, we raised $12.5 M when Ether was $250 and we sold some of it when it was reaching a $1000, so we are in the good position of having a runway for at least five years regardless of the Ether price.

 

4. Where is your company based? You were talking about the Brexit, are you based in the U.K.?

Well indirectly, our company is based in Gibraltar, so yes we are potentially affected by the Brexit and it’s super hard to predict right now.

 

5. This leads me to my next question. Is Jurisdiction a supporting factor or a Pulling one for your company?

Currently, it’s a mess. Prediction markets are heavily regulated so if you want to build anything, you need to have a license and we see a lot of use cases so we are currently in the process of getting a license in Gibraltar and of course then we need to look at if we can use the license in Europe or not, we will see, fortunately, we do have alternatives but we need to wait…

 

6. As we are in the first quarter of 2019, what do you see the year holding for Blockchain and your company?

We do see the year 2019 to be a great year. We are very much focused on Ethereum and the emergence of what the people call Decentralised or Open Finance. And it is very much exciting for exchanges to share liquidity and we think prediction markets can be considered as glue where in some cases it can hold things together. Also, an emphasis on Derivative products to make everything work nicer together. That’s one trend, another trend we are quite excited about are DAOs (Decentralised Autonomous Organisation). A lot of those platforms still have to make a trade-off because being completely decentralized means you can never change it, you can never upgrade it or you have the ability to upgrade it (then it’s not really decentralized haha). The sweet spot in between is having it controlled by a DAO which gives you those abilities.

 

7. What utility does the Gnosis Token (GNO) provide?

The GNO gives you the right to use our protocol and we think it can be considered as one of our drivers of Adoption. We still have a bunch of tokens under our control and we will use them aggressively to get adoption for our platform.

So, in a nutshell, we’re incentivizing adoption through giving out our tokens.

 

Any ending remarks for the industry, Martin?

To the projects that are live, keep going. We encourage everyone to keep working hard. We recently launched the Dutch Exchange, and just in the last weeks we demonstrated the throughput by carrying out a couple 100 of $100,000 orders, so we are the only decentralized exchange currently which can handle such amount of transactions. Every other exchange will completely crash the price with such large orders. But in our case, because it’s executed fairly slowly via an auction but it was able to process and handle that kind of liquidity. And in the Dutch Exchange’s protocol, we will completely be under the control of a DAO. So we want to experiment with the concept of DAOs as early as possible. And we encourage everyone to be a member of this DAO, owner of this DAO is called the DX DAO, and to be an owner, all you need to do is to lock down some Ether, GNO or any token for that matter and that will give you ownership of this exchange.

 

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What do you think?